Oppenheimer - September 17, 2009 - Resuming Coverage of Wireless Tower Stocks


Resuming Coverage of Tower Stocks: Attractive Fundamentals
Initiating Coverage on AMT and CCI with Outperform Ratings
44 pages

Table of Contents
Wireless Towers: Horizontally Focused; Stable, Recurring FCF Generation ...................... 4
Tower Investment Positives ................................................................................................ 6
Investment Concerns .......................................................................................................... 8
NC Computing to Drive Tower Demand .............................................................................. 9
Towers: Horizontally Segmented Models .......................................................................... 10
Wireless Focus on Data to Drive Demand for Tower Leases............................................ 11
The iPhone Effect: Data Usage Growth ........................................................................ 11
Expect Portable Thin Devices to Drive Network Upgrades ........................................... 12
Utility from New Applications Drives Usage .................................................................. 12
4G Rollouts Already Started.............................................................................................. 14
Industry Model: Expect Continued Growth ........................................................................ 15
Tower Consolidation ......................................................................................................... 17
Location, Location, Location ............................................................................................. 18
Capital Structure: Can Support High Leverage ................................................................. 19
Attractive Valuation ........................................................................................................... 20
REIT Structure Unlikely in the Next 5 Years ..................................................................... 21
Regulatory Overview ......................................................................................................... 22
Federal .......................................................................................................................... 22
State and Local ............................................................................................................. 22
Electricity Backup Generators ....................................................................................... 22
Sherman Act ................................................................................................................. 22
Inventory Check of Airwaves ......................................................................................... 22
Initiating on AMT with Outperform Rating ......................................................................... 23
Price Target Calculation ................................................................................................ 23
Key Risks to Price Target .............................................................................................. 23
Initiating on CCI with Outperform Rating ........................................................................... 24
Price Target Calculation ................................................................................................ 24
Key Risks to Price Target .............................................................................................. 24
Towers 101 ....................................................................................................................... 25
Types of Towers ........................................................................................................... 26
Antennas ....................................................................................................................... 26
Base Station Equipment................................................................................................ 27
Capacity Increases ....................................................................................................... 27
Cellular Network Technologies ..................................................................................... 28
Glossary of Mobile Standards ........................................................................................... 29
GSM (AT&T and T-MobileUSA) .................................................................................... 29
CDMA (Spint Nextel and Verizon Wireless) .................................................................. 30
iDEN (Sprint Nextel) ...................................................................................................... 31
WiMAX (Clearwire) ....................................................................................................... 31
LTE (GSM and CDMA Carriers) .................................................................................... 31